Morgan Stanley analyst Betsy Graseck - a contrarian analyst? - recommends buying Citigroup shares, even though the stock's been under enormous pressure this week after navigating a 1:10 reverse split.  As it turns out, M. Stanley is the 2nd big buyside house to get bullish on the stock - here's why.

1.  Citi is shrinking non-core assets faster than we expected, in part via asset sales.  MS now estimates a 6.75-year wind-down, below its prior 9.25-year estimate.  As a result, the [net present value] of  non-core losses falls 69%, to $1.8 billion from $5.8 billion.  MS modeled Citi Holdings at 5% of assets in 2014 vs. 17% in [first-quarter 2011] (which added 2 cents to 2013 EPS estimates).

2. Non-U.S. markets are showing higher growth and returns.  MS is raising its international earnings CAGR for Citi’s ongoing core business to 8% from 6% through 2013 (which added 3 cents to the 2013 EPS estimates).

3. Faster Citi Holdings wind-down with lower losses frees up [an estimated $19 billion] through 2014.  MS expects it to go toward buybacks starting in 2012, and forecast 49% of current market cap returned to shareholders through 2014, including 9% via dividends ([adding 3 cents to 2013 EPS estimate]).   [Associated Press, 5/6/11]